Q & A Interview with Clarity CEO, Jon Newbery

I’m of English origin, but I left in 1991 and went to Poland at the time that Arthur Anderson for a six week mass privitisation program which involved privatising 500 state owned companies in Poland, and six weeks became three months became a year, met my fife and I spent nine years there.

The first 4½ years was working with Anderson starting its practice - we grew it from virtually nothing to about 300 people when I left. Andersons became Ernst and Young and it’s now one of the most successful practices that Ernst and Young have around the world.

Around 1995 I kind of felt there may have been more to life than working in Anderson’s environment, and I went off to run a venture capital fund. We listed in Canada on the Toronto Stock Exchange and were investing in Poland. We invested in a whole bunch of companies, from glass bottle manufacturers to hot water tank manufacturing, bakery equipment, real estate, and one of the businesses that we invested in was cable TV business, which at the time was really just an idea that a bunch of guys came to us with.

So we started buying towns and communities up and pulling them together to start to pull together this cable TV business, we put in about $10, $15 million dollars, and borrowed a bunch of money from the bank as well, and over a period of time grew it into a reasonable asset, which ultimately was the reason the fund got sold. We had a hostile takeover bid on the Toronto Stock Exchange to acquire the business from the people that eventually acquired it EVL – Emerging Ventures Limited out of the States, who bought it principally for cable TV business.

It’s called Multimedia Polska – and is now the biggest regional cable TV business in Poland, it’s is listed on the Warsaw stock exchange, and they’ve done pretty well out of it.

At one stage I was offered to go and run that, but I decided to move the family to Australia instead, and we moved down here after we sold the fund in 1999 – and that’s how I started to get involved in the IT industry, by backing the cable TV business.

When I moved down here in early 2000, I joined an IT investment bank called Newport Capital, that I spent about a year with on the back of the dotcom bubble bursting, so it was a pretty tough year.

Then I thought there would be other opportunities that I could use my venture capital/ investment banking background and go out and help companies in the IT industry by going and helping them raise money, and write their business plans.

I ended up working for myself for four years, working with IT companies helping them raise money, sell their businesses, try and improve their operations, take them globally and so on, and then five years ago I was approached to join Powerlan as COO. I came on board spent some time trying to sort out what we were doing, sold a couple of businesses, trying to restructure the business, we bought some businesses as well.

The focus now we’ve got a clear strategy around Clarity which is the biggest piece of the Powerlan group, and then we have two other businesses – IMX software which is around foreign currency bank trading, and converter technology which is based in the US as well.

What’s your vision for Clarity?

The telecommunications industry is clearly struggling at the moment. There’s a number of challenges they face, not least around their revenues and the shift from voice to data and the challenges that puts on their networks, and that challenge that puts on their top line as well.

They’re undergoing a lot of transformations at the moment, and our message has always been around helping to simplify their operations. We don’t regard ourselves as best of breed in terms of particular functionality, it’s more best of suite – it’s capability across the whole horizontal.

So it’s right the way from the build through to the sell and the fulfil and the assure, but on a simplified basis, so the tagline is around simplifying operations, and that’s what we’re all about – helping the operations to simplify as they go through this transformation and not spending lots of money on lots of complex things that require lots of interfacing and integration between the different parts.

Is there anything you find frustrating about doing business in IT?

It’s no doubt it’s a challenging business we’re in, all of the businesses that we’re involved in are principally project based. We’re working very hard to enhance our relationships with the existing customers, to have more of an ongoing revenue stream.

Ian Campbell, who is the main backer of the business and owns about half of the Powerlan group has always been very much involved in transactional based business with recurring revenues, and the biggest challenge for us across the group is to try and smooth our revenues, because our costs are relatively consistent every month – we’re entirely dependant on people and about 70 per cent of what we spend every month is on people. So there’s a predictability every month about what we spend, there’s an unpredictability about the revenues that we generate.

The biggest challenge we have as a business in the space is around trying to smooth the revenue stream, and improve the relationships we have with our customers. We predominantly focused around South-East Asia and they’re challenging markets to operate in. There’s lots of different cultures, but if you walk around the office you’ll see there’s lots of different cultures in the office as well. We try and understand the markets that we sell into and try and get local people that understand the culture involved with us.

We’re very much focused on having local teams as well to understand cultures and the way people do business there, but in recognising that this is an Australian company, we have principles and values. So while we need to understand the cultures, we also need to work around what we see as the important values for us.

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